Record Quarter Closes B of A’s Profitable Year
BankAmerica Corp., capping its first profitable year since 1985, on Thursday reported record earnings for the final quarter of 1988.
The San Francisco-based company--the nation’s third-largest banking organization and the parent of Bank of America--said it earned $265 million in the fourth quarter, up more than fourfold from $60 million in the same period of 1987.
It was the sixth consecutive profitable quarter for the company, which once appeared to be in turmoil because of troubled loans, primarily to Third World countries.
The quarterly results boosted profit for 1988 to $726 million, in sharp contrast with the previous year’s $955-million loss, the company’s largest.
Fourth-quarter profit was increased by last year’s agreement between Brazil and its creditor banks on a debt restructuring that ended that country’s moratorium on interest payments. For BankAmerica, the pact brought in back interest payments totaling $351 million.
The company also cited increased business, reduced operating expenses and low credit losses.
Don Crowley, an analyst with Keefe, Bruyette & Woods in San Francisco, said the results were better than expected and led him to sharply increase his earnings estimate for 1989.
“Once you take out all the statistical noise in the numbers,” Crowley said, the result reflects “a very solid performance” by a bank with more than adequate loan-loss reserves.
Wall Street analysts have speculated that BankAmerica, which has not paid a dividend since recording its first annual loss in 1985, may reinstate it before the company’s annual meeting in April. But Chief Financial Officer Frank Newman told reporters in San Francisco that he cannot yet say when the dividend will be resumed.
BankAmerica common stock closed at $19 a share, up 87.5 cents, in trading Thursday on the New York Stock Exchange.
Several big New York-based banking companies--including J. P. Morgan & Co., Citicorp and Chase Manhattan--also reported big gains earlier this week attributed in part to the resumption of payments by Brazil, which had suspended them from early February, 1987, to the beginning of last year.
On Thursday, however, big banks reported mixed results. Bankers Trust New York Corp., the nation’s ninth-largest banking group, reported fourth-quarter income of $185.5 million, down from $284.5 million.
It blamed the drop on a $309.9-million decline in foreign exchange and other trading revenues, which dwarfed its $95-million pretax gain in payments from Brazil.
But Bank of New York, which last year acquired Irving Bank Corp. to become the nation’s 10th-largest bank organization, said fourth-quarter income rose to $54.7 million from $45.9 million.
